Cocoa Prices Spike During Political Crisis
Prices for raw cocoa continue to rise this month, as political conflict in one of the world’s most prolific producers of cocoa beans threatens to create a worldwide cocoa shortage.
The Republic of Côte d’Ivoire (more commonly known in English speaking countries as Ivory Coast), on the coast of West Africa, produces 40 percent of the world’s cocoa beans. And right now, the country’s government is in crisis.
In November 2010, longtime Ivory Coast President Laurent Gbagbo lost an election to Alassane Ouattara, leader of the opposition Rally of the Republicans party — at least according to international election observers, the Economic Community of West African States and the U.N. But Gbagbo has disputed the election results and refuses to step down. The result has been a divided nation with a government in limbo.
In an attempt to choke off President Gbagbo’s economic power, the legitimate President-Elect Ouattara has called upon the nation’s cocoa farmers and processors to stop exporting cocoa until Gbagbo steps down.
This move of peaceful economic protest has been supported by the U.N., the U.S. State Department, and even the U.S.-based corporate food production giant Cargill, which in February temporarily stopped importing Ivory Coast cocoa.
But in response to the Ivory Coast political conflict and Ouattara’s cocoa export ban, global cocoa prices have risen every month since November, and show no sign of falling until the crisis is resolved.
Higher cocoa prices translate, of course, into higher costs for chocolate makers and higher chocolate prices for consumers.
According to a recent article in Business Week, some big-name candy producers, like Hershey and Kraft, reluctant to raise product prices, have responded to the growing cost of both cocoa and another key chocolate bar ingredient, sugar, by injecting air bubbles into their confections to lower the amount of actual chocolate in candies — and then marketing the altered treats as “light” or “lower calorie.”
But candy, drink and food producers will likely just have to raise prices over the next several months on products containing cocoa, which could make chocolate a less affordable luxury for some in this tough economy.
How Much Should Chocolate Cost?
Positive political resolution in Ivory Coast in the future may bring cocoa prices back down. But in reality, cocoa prices have been volatile for years, and the overall trend for decades has been toward more expensive cocoa.
It may seem counterintuitive, but one of the reasons cocoa was growing more and more expensive even before the Ivory Coast political crisis may actually be that the most of the African farmers who produce cocoa beans are paid too little.
The average cocoa farmer in Africa earns just 80 cents a day. Farm work involves hard physical labor and long hours, and cocoa farmers have little access to resources more commonly available to workers in urban areas, like health care for their families, or education resources for their children.
As a consequence of such low pay, coupled with the difficulties of their lifestyle, many knowledgeable cocoa farmers whose families have been farming cocoa beans for generations in Africa are now abandoning their rural farms and seeking new work opportunities in cities, leaving cocoa distributors scrambling to find skilled workers to supply cocoa beans.
The cacao trees that produce cocoa beans are highly susceptible to pests and the ravages of weather, and it takes a skilled farmer to produce a bumper crop of cocoa year after year. Paying cocoa farmers more fairly for their product might actually save corporate cocoa buyers money in the long run, by stabilizing the lifestyles of experienced farmers and making the job more attractive to highly skilled young people, which will in turn improve the productivity of cocoa farms.
Fair trade organizations, like the World Cocoa Foundation, argue that the best way to keep chocolate available at affordable prices for generations to come is to pay cocoa farmers living wages for their work — which can often be accomplished by reducing corporate profit margins by just a few percentage points, or raising the price of chocolate by just a few cents a bar.
So next time you have a craving for chocolate or cocoa, consider paying just a little bit more for a fair trade brand. You’ll be supporting the people of the Ivory Coast, who are currently protesting in the name of freedom, and also helping to ensure that cocoa farming can continue for generations to come.
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Detail of photo of roasted cacao beans by SuperManu, from Wikimedia Commons. Used under Creative Commons license.